Indicators of Good Governance: Developing an Index of Governance Quality at the LGU Level

The initiative is implemented in collaboration with the Development Academy of the Philippines (Jose Maria Escriva Drive, Pasig City).

The primary objectives of this study are:

to develop measurable indicators of good governance at the local government level

to test how applicable and acceptable good governance indicators are in evaluating and monitoring local government unit (LGU) performance

to find out how these indicators can be integrated in the monitoring and evaluation system within the framework of Sustainable Human Development

In particular, this study attempts to develop a composite index of the quality of governance at the local government level. In doing so, the biggest challenge lies in being able to reduce the multiple facets of the governance concept into a small number of key observable dimensions.

The next one is to define a limited number of indicators which are able to capture the essence of each dimension and which can be measured with some consistency and comparability over time and space.

The governance quality index that was constructed for this study focuses on three principal elements:

Most of the indicators listed can be measured based on LGU records, financial statements, other pertinent documents and key informant interviews with local government officials and NGO representatives. Some of the indicators are based on experiential/attitudinal data that required the conduct of public opinion surveys (e.g., those relating to micro-level accountability).

In this regard, the respondents to the opinion surveys were drawn from local residents using multistage (cluster) sampling. The coverage of the public opinion survey conducted in this study was sketchy because of time and resource constraints.

On the average, some 50 respondents were interviewed for each pilot LGU. Admittedly, this number is not large enough to yield a decent margin of error but the surveys undertaken for purposes of this study were primarily done to pilot test the questionnaire and assess the feasibility of applying this approach in a more rigorous manner in future researches.

Measurement Methods / Tools Generated or Used :

Before constructing the overall governance index as well as the composite indices for each of the three Strategic Objectives, the indices of each of the performance indicators were first modified in two ways.

One, all indices were defined in such a way that higher numbers represent better governance.

Two, all indices were re-scaled such that they all range from 0 to 1. For the revenue effort index, the cost recovery index, per capita social service expenditure index, and social service expenditure ratio, the re-scaling was achieved by dividing the actual figures by 2 times the relevant national average. This implies that LGUs whose performance with respect to these indicators are equal to the national average get a score of 0.5.

The overall governance quality index (GQI) constructed for this study was derived by consolidating the composite indices for each of the 3 Strategic Objectives which in turn were obtained by creating a composite index for each of the Result Packages.

The overall governance quality index as well as the composite indices for the Strategic Objectives and the Result Packages were aggregated by assigning equal weights for each of their respective components.

List of Indicators:

Strategic Objective I: Optimized Resource Support for Human Priority Concerns. This objective is broken down into 3 result packages: revenue generation; resource utilization; and adoption of systems and processes for increased sustainability of revenue generation and utilization efforts.

Strategic Objective II. Effectiveness/Efficiency in Social Service Delivery. Two alternative ways of delineating the result package/s for the Objective II are suggested. The first one makes use of public opinion surveys and defines Strategic Objective II in terms of the beneficiaries' net satisfaction with specified social services delivered by LGUs. The second one makes use of administrative data and defines Strategic Objective II in terms of (1) the adequacy of services provided and (2) the presence of a strong vertical linkage with national government agencies.

Strategic Objective III. Accountability. Following the framework on accountability provided by the World Bank 1992 and Paul (1991), this study breaks down overall accountability into macro-level accountability and micro-level accountability.